USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
- The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
- The market now expects the first rate cut in September.
CAD
- The BoC left interest rates unchanged at 5.00% as expected changing a line in the statement that indicated less concern about inflation and thus the possibility of a cut in June if the trend remains intact.
- The latest Canadian CPI came in line with expectations although the underlying inflation measures eased further.
- On the labour market side, the latest report missed expectations across the board although we saw an uptick in wage growth which is something that the BoC is watching closely.
- The Canadian Manufacturing PMI improved slightly in March while the Services PMI weakened further. Both the measures remain in contractionary territory.
- The market expects the first rate cut in June.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD pulled back into the blue 8 moving average and bounced as the buyers stepped in to position for a rally into new highs. From a risk management perspective, the buyers will have a much better risk to reward setup around the 38.2% Fibonacci retracement level and even better around the 61.8% Fibonacci retracement level as they will also find the confluence of the previous resistance now turned support.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that besides the 38.2% Fibonacci retracement level, we can also find a trendline adding confluence around the 1.37 handle. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to pile in and target a drop into the 61.8% Fibonacci retracement level.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of a weakening momentum often followed by pullbacks or reversals. The price broke below the trendline support, so we have higher chances to see a drop all the way down to the major trendline. We have a black counter-trendline acting as resistance now, so if the price gets there, we can expect the sellers to step in to position for a drop into the major trendline. If the price were to break to the upside though, the buyers will likely pile in to position for a rally into new highs.
